Key Points

Many retirees apply a fixed withdrawal rate to their savings.
A more flexible approach based on market conditions could help your money last.

For many people the hardest part of retirement planning begins after they stop working. Saving for retirement is one challenge. Figuring out how to turn those savings into lasting income is another.

It is common for retirees to establish a retirement savings withdrawal strategy based on a fixed rate. For example the 4 percent rule is a popular one for retirees.

But sticking to a fixed withdrawal rate could actually end up hurting you. A better approach is to use market conditions to guide your withdrawals instead.

It pays to be flexible in retirement

You may be inclined to withdraw a fixed amount from your retirement savings every year plus adjustments for inflation. This approach might make your life easier from a planning standpoint since you are sticking to the same rate for many years. But it could also put unnecessary stress on your nest egg.

If you stick to the same withdrawal rate when the market is down you could eventually put yourself at risk of running out of money. And even if that does not happen if you are hoping to pass wealth along to heirs you may not want to let your balance drop too heavily.

The solution is to adjust your withdrawals based on market performance.

Here is how that might work. You start by estimating your annual income needs and figuring out a withdrawal rate that supports them. From there you stick to that plan when the market is doing well or even flat. But during market downturns you adjust your spending downward to limit the amount you need to withdraw.

You are apt to have the most flexibility in the discretionary part of your budget. After all you need to pay your car insurance eat and cover your property tax bill. But you can adjust things like leisure spending and travel during periods when the market is down to minimize strain on your savings.

Now at first that might seem like a raw deal. After all you cannot control what the market does. Why should you be denied things because of a downturn?

But if you do not take this approach you could end up putting your savings and long-term financial stability at risk. And remember during strong market years you can increase your spending and withdrawals to compensate if you so choose.

The right approach could make a huge difference

Part of the goal of saving for retirement is to not have to constantly worry about money once you stop working. If you do not adjust withdrawals when the market is down you might cause yourself a lot of stress.

So rather than take a rigid approach be ready to pivot. It could be your ticket to stretching your savings as long as you need to.

The overlooked Social Security opportunity for retirees

If you are like most Americans you are a few years or more behind on your retirement savings. But a handful of little-known Social Security strategies could help ensure a boost in your retirement income.

One easy trick could pay you as much as 23760 dollars more each year. Once you learn how to maximize your Social Security benefits we think you could retire confidently with the peace of mind we are all after.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq Inc.